Market Quick Take - 28 March 2025

Market Quick Take - 28 March 2025

Market drivers and catalysts

• Equities: US auto tariffs weigh; GM and Ford plunge; Tesla resilient; European autos hit; Asian markets cautious ahead of China PMI
• Volatility: VIX rises; tariffs spark anxiety; implied volatility elevated; PCE inflation in focus
• Digital Assets: Bitcoin retreats to $85K; altcoins sharply lower; BTC options expiry critical today; trade tensions dampen risk appetite
• Currencies: USD weakened on auto tariffs and mixed data
• Fixed Income: 10-year Treasury yields reverse lower after hitting one-month high
• Commodities: Gold surged to a record high on trade war worries and momentum
• Macro events: US PCE Price Index, U. of Michigan Sentiment

The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events.

Macro data and headlines

• US Q4 GDP (QoQ) was revised higher to 2.4%, above the estimated 2.3% while core PCE prices came in slightly below expected at 2.6% vs 2.7% est.
• US Initial jobless claims remained stable at 224k, with the 4-week average dipping to 224k. Despite storms, claims stayed low, but Pantheon Macroeconomics predicts an increase due to hiring and firing trends. Continuing claims fell to 1.856 million, suggesting a potential unemployment rate drop to 4.0%.
• The cost of living in Tokyo rose more than anticipated from the previous month, keeping the Bank of Japan on track for further interest rate hikes. Consumer prices excluding fresh food rose 2.4% in March, while the overall level of inflation picked up to 2.9% from February’s 2.8%.
• Investors and traders are cutting back risk ahead of President Donald Trump’s plan to announce so-called ‘reciprocal tariffs’ on April 2, after slapping levies on imports of all automobiles into the country, pondering how the moves will impact inflation and growth in the US economy.

Macro calendar highlights (times in GMT)

0700 – UK Jan Trade Balance & Feb Retail Sales
1000 – Eurozone March Consumer Confidence
1230 – US Feb Personal Income and Spending
1230 – US Feb PCE Price Index
1400 – U. of Michigan Sentiment

Fed Speakers: Barr (1615) & Bostic (1945)

Earnings events

• Next week: Constellation Brands, Conagra Brands, Lamb Weston Holdings

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities

• US: US stocks closed lower on Thursday after President Trump’s new 25% tariffs on imported autos reignited trade war concerns. The S&P 500 (-0.33%), Dow (-0.37%), and Nasdaq (-0.53%) all retreated amid broad losses led by automakers; General Motors (-7.3%) and Ford (-3.9%) slumped, while Tesla (+0.4%) edged higher benefiting from domestic production. Economic data provided mixed signals, with revised Q4 GDP growth slightly better at 2.4% and initial jobless claims stable, but a larger-than-expected trade deficit adding uncertainty. Futures point slightly lower today as investors await critical PCE inflation data.
• Europe: European markets dropped Thursday following Trump's auto tariffs announcement, significantly impacting auto stocks. The DAX (-0.7%) closed at its lowest since mid-March, pressured by declines in Mercedes-Benz (-2.7%), BMW (-2.6%), Volkswagen (-1.5%), and Stellantis (-4.6%). Broader European indices also slid, with STOXX 600 (-0.4%) and CAC 40 (-0.5%) affected by trade tensions and potential reciprocal tariffs. Sector-wise, miners and automotive were weakest, while retail saw gains led by Next Plc after positive earnings guidance. Markets remain wary of additional tariff developments expected next week.
• Asia: Asian stocks mostly fell Friday, extending losses amid escalating US trade tensions. Japan's Nikkei slumped over 2%, pressured by hotter-than-expected inflation prompting bets on a potential BOJ rate hike. Automakers Toyota and Honda (-5% each) led declines due to tariff concerns. South Korea's KOSPI fell 1.7%, hit by tech and auto sector weakness, while Hong Kong’s Hang Seng (-0.9%) retreated on trade worries despite bullish outlook upgrades from Morgan Stanley. China's CSI300 (-0.6%) and Shanghai Composite (-0.7%) also weakened. Investors remain cautious ahead of China's PMI data release.

Volatility

Volatility is rising, with the VIX index closing at 18.69 (+1.96%), reflecting heightened anxiety around new auto tariffs and uncertainty over upcoming reciprocal tariffs starting April 2. Short-term volatility indicators, including VIX1D (+6.09%), signal ongoing market caution. Implied volatility remains elevated, with major indices' IV ranks around 50%, indicating persistent risk sentiment. Markets today focus closely on the US PCE inflation report for further directional cues.

Digital Assets

Bitcoin and altcoins declined Friday amid escalating trade tensions and risk-off sentiment triggered by Trump's auto tariffs. Bitcoin fell 1.8% to $85,690, while Ethereum dropped sharply by 4.4% to $1,916. XRP and Solana also fell more than 3%. Crypto stocks mirrored the downturn, with Coinbase (-2.8%) and Marathon Digital (-1.1%) under pressure. Investors await the $16.5 billion Bitcoin options expiry today, which could significantly influence market direction, especially as bulls aim for prices above the critical $90,000 level.

Fixed Income

• US 10-year Treasury yields rose to a one-month high on Thursday as the market braced for the impact of tariffs on inflation and growth, only to revert lower after finding buyers around 4.4%. With the 2-year tenor holding steady around 4%, the 2s10s spread has flattened by four basis points to 34. Ahead of next week’s tariff announcements, traders will be focusing on today’s US core PCE, the Fed’s preferred inflation gauge as well as sentiment data from the University of Michigan.

Commodities

• The Bloomberg Commodity Index is heading for a small weekly gain of 0.3%, taking the year-to-date to +8%, with a surging precious metal sector (+3.3%) and, to a lesser extent, energy offsetting broad losses across the agricultural sector as well as industrial metals. On an individual basis, the top performers are silver (+6%), gold (+2.2%), WTI and Brent crude oil (+2.2%), and gasoline (+2.6%).
• Gold trades at a fresh record high above USD 3,080, supported by momentum and continued demand from investors seeking protection against an economic fallout from an escalating trade war. Silver, meanwhile, trades higher after clearing the $34 resistance hurdle and is currently the best-performing commodity this week, while rangebound platinum’s discount to gold continues to widen, hitting a record USD 2,100.
• Oil is heading for a third weekly increase, with a potential economic fallout from the trade war being offset by sanctions threatening supply from Iran and Venezuela. In addition, the US has significantly increased its military presence in the Middle East, moving several B-2 stealth bombers to Diego Garcia.
• Copper prices have finally rolled over, with losses seen in both New York and London as the arbitrage window between the two futures exchanges is closing amid speculation the US administration aims to introduce tariffs within weeks.

Currencies

• The USD trades nearly unchanged on the week with gains against the JPY on widening yield differentials, MXN and EUR being offset by losses against AUD, CAD and GBP. On Thursday, it weakened after President Trump confirmed auto tariffs starting April 2nd. Mixed economic data showed upward revisions for Q4 GDP and sales, but downward revisions for core PCE prices, GDP deflator, and consumer spending. Focus shifts to monthly Core PCE data.
• EUR strengthened, briefly reaching the 1.08 level against the softer USD. Tariffs were the focus, with an EU Commission spokesperson stating that the EU is preparing a timely, robust, and well-calibrated response to new import tariffs, though no timeline is provided.
• GBP gained as the UK is perceived to be less affected by tariffs, although GBPUSD faced resistance near the 1.30 level.
• USDJPY briefly rose above 151 with the JPY weakening amid a widening yield spread to the US Treasuries, only to edge higher following stronger-than-expected Tokyo CPI data, which likely keeps the Bank of Japan on track for further interest rate hikes